Reply #16: right, there's only one problem

[northzax]

you're basically suggesting that Brasil become a colony of China. Trading raw materials for manufactured goods is not the way to wealth or sustainability, it is a road to poverty and dependance. If, for example, Brasil and China have a basically always equal trade balance, it might work for a while, it's a barter system, in essence. but what happens when it is unequal? let's take a look.

let's say that you and I make a deal. I will paint your house in exchange for you mowing my lawn. good deal, you can mow well, and I can paint well. works for us both. until I need fifty more hours to finish your house than it takes you to mow my lawn. what value do I have? 50 hours of lawn mowing labor in the bank? what can I do with that? I can't buy food, I can't buy gas, all I can do is buy more lawn mowing. which is fine, but I don't need it. so you ask me to paint more, what am I going to do?

Brasil, for instance, runs a trade surplus with China of about $100b a year. so in about ten years, or about 1.4 trillion yuan at the legal (chinese) rate. so every year, there will be 1.4 trillion Yuan entering Brazil. what are they supposed to do with that paper? buy more stuff from China? they can't buy from anyone else in the world (because China doesn't accept Yuan from anyone outside China) how much oil will a trillion yuan buy? how much food from Venezuela? and what is that country going to do with it? remember, Yuan is not tradable outside of China, you could walk into a bank with a trillion Yuan and they would give you nothing, because it is literally worthless. you could walk into your local grocery store with a trillion Yuan, and they wouldn't sell you a banana. because it's worthless.

Dollars have value anywhere in the world. Euros have value anywhere, Yen have value anywhere. Yuan have value inside the People's Republic of China. and let's be honest, Beijing has plenty of them, and doesn't need more. this idea of trading in Yuan and Reals is a great idea for China, they can send all the Yuan they want to Brasilia, worth literally whatever they want them to be worth. the Reals they get in exchange can be sold for dollars or euros or oil or tacos. the Yuan that Brasil gets back can be spent in China only. it's brilliant for Beijing and awful for Brasil.